For nine years, nearly all commercial-zoned properties in town limits have been part of the Nashville TIF district, designed to direct a portion of property taxes to use on projects that benefit the town in some way.

For nine years, that TIF district has generated zero dollars.

The way TIF (tax-increment financing) works is that it captures incremental growth, the difference between a “base year” of tax assessment and the tax current assessment.

That model assumes that tax assessments will rise over time.

In Nashville, tax assessments on properties in the TIF district went down instead. That was due to various factors, but a big one was when big-ticket properties sold for much less than what they were assessed, said Ed Curtin, adviser to the Nashville Redevelopment Commission.

TIF only captures new growth in taxes, so since there was no new growth, the TIF has collected nothing.

“Because we just have not seen any growth, we kind of said, ‘Well, maybe we need to reset the clock,’” Curtin said.

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Last week, a new Nashville TIF plan and new economic development plan went before the Brown County Area Plan Commission and received a positive vote. That’s the second in a six-step process to get the TIF district redone.

The “clock” Curtin is referring to is the base year of the tax assessment, the starting point after which all future tax growth will be captured. That captured money would then be set aside for at least 25 years for the RDC to manage and decide what to do with it.

“At least” is key, because that 25-year countdown doesn’t begin until after the TIF district incurs debt, which it could do if it decided to commit to a project like building new water lines or sidewalks.

After the 25 years are up, all the increased tax revenue that the TIF district parcels are generating will flow again to all taxing units, like schools, counties, towns and townships. During the life of the TIF, those taxing units only receive the taxes they had been getting at the base-year rate.

If the new TIF districts and economic plan are approved, the new base year for assessment would be Jan. 1, 2020.

The changes

The Nashville RDC wants to make several major changes to its current TIF plan as well as to its economic plan.

Currently, there is one TIF district that encompasses business-zoned property in town limits.

The new plan splits the TIF district into two different districts: One containing Hard Truth Hills on Old State Road 46 and Quaff ON! brewery on 135 North, and the other containing all other business-zoned property in town limits.

Hard Truth Hills and Quaff ON! are owned by the same people.

The 300-plus-acre Hard Truth Hills property had not been in the original TIF district because the owners had not requested that it be included, then-RDC member Jane Gore said in 2018. However, that’s not necessary for it to be put it in a TIF.

This meant that the RDC did not capture the growth in property taxes that occurred when part of the wooded acreage was developed into a multi-million-dollar distillery/restaurant/event complex in 2018. That tax growth instead went to the entities that would normally receive it.

The Town of Nashville, for instance, received a bump of about $18,000 in the tax levy for the 2020 budget — which town leaders were thankful to have that year because a county council-approved “freeze” on taxes had reduced the amount the town could get from other sources by about that much.

The rationale for splitting Hard Truth Hills/Quaff ON! off from the rest of the TIF district is so that the RDC can better predict how much tax growth and how much increment it’s likely to see over the next couple decades, Curtin said last week. That will help the RDC budget for possible projects it can do with that money.

Also, Curtin is projecting that some infrastructure work will need to be done as Hard Truth Hills and/or Quaff ON! make changes to their properties.

Last summer, the owners announced plans to move the Quaff ON! brewing operation from the former bowling alley and hotel buildings it has been occupying on 135 North and build a new brewery at Hard Truth Hills; then, the brewery site would be redeveloped into apartments to serve working families. There is no current timetable for when that project might start.

In the economic development plan that was prepared with the TIF change documents, Curtin estimated that the TIF increment would be around $4 million, which the RDC could spend on “on infrastructure in or serving the area.”

Last week, Curtin could not say how much of that he’d predicted would come from the Hard Truth Hills/Quaff ON! TIF and how much would come from the central Nashville TIF, as it had been several months since he did those estimates. But he said he came up with the rough $4 million from estimating a capture of $200,000 worth of new assessed value per year for 20 years. That could be optimistic, he said, because development plans sometimes change, and there’s no real way to know how much the actual assessment will be at the time it occurs.

Curtin told the APC last week that “we are at a point specifically with Hard Truth Hills where they would like to be able to have this tool to use as they move forward with some of their development, so that’s part of the reason why we’re creating two separate areas.”

But just because the Hard Truth Hills/Quaff ON! and central Nashville areas are in separate TIF districts, that does not mean that TIF money collected from one of them has to be used on projects that only help that TIF district, Curtin said. The wording in the document is that projects are to “benefit, serve or (be) in the allocation area.” It’ll be up to the Nashville RDC and, at some dollar level, the town council to decide if projects are appropriate to do with TIF money.

The projects

The economic development plans which accompany the new TIF maps list 23 possible projects that could be undertaken with TIF money:

• Transportation enhancement projects like curbs, gutters, shoulders, street paving and construction, bridge work, sidewalks, multiuse path improvements, street lighting, traffic signals, signage, parking lot improvements, landscape buffers and site improvements;
• Projects and/or incentives that attract workforce housing;
• Public amenities construction and implementation such as street trees, street furniture and wayfinding signage;
• Utility infrastructure projects like utility relocation, water projects, lift stations, wastewater or stormwater lines, retention ponds, ditches and stormwater basin improvements;
• Public park improvements and recreational equipment;
• Acquisition or construction of projects to enhance the cultural attractiveness of the entire unit, including the economic development area;
• Projects to enhance the public safety of the entire unit, including the economic development area;
• Tourism attraction and enhancement projects;
• Job training and assistance as permitted under IC 36-7-14-39(b)(3)(K) and IC 36-7-25-7;
• Eligible efficiency projects as permitted under IC 36-7-14-39(b)(3)(L);
• Financial incentives to new and existing businesses locating in the economic development area as permitted by law, including targeted incentives to encourage the reuse and development of commercial structures;
• Sidewalk/streetscape improvements in the village;
• A multipurpose trail down Old State Road 46/Main Street to Hard Truth Hills;
• Water and sewer infrastructure upgrades/installation at the Hard Truth Hills and Orchard Hill (Quaff ON!) sites;
• A multipurpose trail from Hawthorne Drive to CVS (matching funds only);
• Extending Hawthorne Drive from State Road 46 to Old State Road 46 (matching funds only);
• Repairing the Pine Tree Hills lift station;
• Repairing the Wells Drive lift station;
• Upgrading utility lines from Brown County State Park to town;
• Replacing aging water lines throughout the system;
• Completing the pressure reducing valve project on the water system;
• Projects identified in the sanitary sewer master plan;
• “All projects related to any of the foregoing projects and all other purposes permitted by law”

This doesn’t mean that all the projects will be done, or any of them will, but these are the possibilities in the new plan. It also says that “the exact nature of specific projects may vary from time to time depending on the needs of the particular development opportunities.”

The purpose

TIF is a tool to help businesses or even housing develop or grow in a community. But there are other tools, too, like tax abatement, which is forgiving a portion or all property taxes for a certain number of years. When Hawthorne Hills was built in 2015, the developers considered TIF, but they ultimately decided to go with tax abatement instead because it worked better for them financially.

So far, nothing in Nashville has been built with TIF money because there hasn’t been any TIF money.

TIF is commonly used in other communities to help developers financially swing certain parts of their projects, Curtin said. If the RDC knows how much TIF money that development is likely to generate, the town or the developer can bond against that future tax money and then the developer would pay the bond back with the tax payments they were going to pay anyway.

“Then, they control the financing for their own project,” Curtin said of the developer. “And from a banking standpoint or a loan standpoint, having that instrument in place probably makes it easier for them to get the rest of the financing they need to do their project. Because otherwise, if they don’t have some kind of arrangement with the town or RDC, the RDC captures that increment and it can use it how it wants, according to the economic development plan. So, that’s the reason you would typically enter into some type of agreement where the developer gets a percentage of the increment to help them finance their part of a project and the town RDC gets their piece to do the things they need to do.

“It isn’t unusual to be used. We have not done it in Nashville before, but we’re probably getting close to a point where something like that could happen,” he said.

Residential TIF?

At their Thursday, March 4 meeting, the Brown County Schools Board of Trustees will be hearing a proposal from Curtin for another TIF area in Nashville in addition to these two proposed commercial ones. The third one would be a residential TIF, which, up until July 1, 2019, wasn’t allowed under state law.

Last fall, the RDC started discussing doing a residential TIF on the 11.2 acres of land between Coffey Hill and Tuckaway neighborhood where a new subdivision is planned, Tuckaway Woods.

A town RDC can develop a residential TIF if the average of new, single-family houses constructed in the past three years is less than 1 percent of the total houses in the area as of Jan. 1 that year.

Once the houses are built, the residential TIF area would be reassessed, and property taxes would likely increase in that area because land with a house on it is assessed higher than vacant land. The RDC could use that incremental tax growth to help build water and sewer lines, sidewalks or other infrastructure; help the developers make the project happen financially through bonds; or other limited uses listed in state law.

Before that idea goes any further, though, the school board has to be consulted and pass a resolution supporting it, Curtin said. That’s why that residential TIF proposal isn’t up for approval by the town and the APC right now, just the two revised commercial TIF areas in town.

Curtin plans for the two commercial TIF proposals to be on the agenda of the Nashville Town Council meeting on Thursday, March 18.